Why Republicans Oppose The State Opt-Out Waiver

March 1, 2011

Now there is good reason why the offer "was met with skepticism by many Republican governors who said they need to learn more about the details." Yuval Levin of the Ethics and Public Policy Center e-mailed me that Obama is offering "essentially nothing." Yuval explains:

He's offering to support legislation that would let states ask for permission to do exactly what Obamacare would require them to do but by different means a little earlier than the law now allows. The law currently allows them to ask for such permission starting in 2017; he now supports legislation that would allow it starting in 2014. But it's not real flexibility because it doesn't allow them to change the ends they pursue, only the means, so they would have to propose something that CBO scores as having the same effect at the same cost (or less) as Obamacare, which means the goals of the law and the peculiarities of CBO scoring still govern.

To win that freedom, though, Obama reminded the governors at a White House meeting that states would have to prove to federal officials that they could still achieve the law's objectives. Specifically, they would need to demonstrate that insurance benefits would be as affordable and as comprehensive, that the same number of residents would gain coverage, and that the alternate approach would not deepen the federal deficit.

Those are the guidelines. States would have to provide reasonably decent coverage to he same number of people without increasing the deficit. They couldn't alter their plan by kicking people off insurance, or sticking them with crummy, high-deductible plans that don't cover vital treatments, or by running up huge deficits. Rubin advises Republicans to reject those criteria:

Republicans would be wise to push back with a much broader opt-out proposal. Then we'll see how willing the president is to give governors real flexibility and refashion a very problematic piece of legislation.

Which criteria does she think Republicans should oppose? Should they be allowed to cover fewer people, limit the kinds of doctors or treatments that are covered, or should they be allowed to raise costs to the federal government?

What the state opt-out waiver does is smoke out bad-faith opponents. Republicans have been careful to insist that they don't just want to repeal health acre reform, they want to replace it with a fantasy alternative that does all the popular things in the plan, but without any tough parts. Obama is saying, knock yourself out. Design a plan like that at the state level. It will become very clear that they can't do it, and that any alternative they propose will involve giving people worse coverage. Which is why, I strongly suspect, they will never approve the state waiver.